THE pace of UK recovery has slowed sharply this month, with the key services sector weighed down by hospitality sector restrictions and the effect of local lockdowns on general consumer spending.

The Chartered Institute of Procurement & Supply and IHS Markit’s flash UK composite output index, which covers manufacturing and services, has dropped to 52.9 this month from 56.5 in September on a seasonally adjusted basis. This signals the weakest growth in four months, and will raise concerns the UK recovery, following plunges in output triggered by the coronavirus crisis, is running out of steam.

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Chris Williamson, chief business economist at IHS Markit, said: "The pace of UK economic growth slowed in October to the weakest since the recovery from the national Covid-19 lockdown began. Not surprisingly the weakening is most pronounced in the hospitality and transport sectors, as firms reported falling demand due to renewed lockdown measures and customers being deterred by worries over rising case numbers."

He added: "The slowdown would have been even more pronounced had it not been for exports rising as overseas customers sought to secure orders before potential supply disruptions as Brexit draws closer.

"The slower growth of output, the renewed fall in demand and further deterioration in the labour market suggest the economy started the fourth quarter on a weakened footing. While Brexit preparations may cause a short-term boost to some parts of the economy ahead of 31st December, rising Covid-19 cases and the imposition of local lockdown measures bode ill for the near-term economic outlook. While the fourth quarter still looks likely to see the economy expand, the rate of growth looks to have slowed sharply and the risk of a renewed downturn has risen."

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Duncan Brock, Group Director at CIPS, said: "Fears over inherent weaknesses in the UK economy materialised this month with a sudden fall in the overall index showing a sharp drop in new orders and a continuing erosion of employment opportunities.

"Where some businesses were largely unaffected or were able to recoup losses quickly following the worst of the pandemic, consumer-facing businesses were the worst hit and some are now concerned about the prospect of total ruin. Either unable to fully open or tempt customers through the doors, hospitality firms saw their hands tied by further lockdown restrictions, safety measures for staff and customers, and [with] the public more reluctant to leave their homes."